Hank Hayes

KINGSPORT — The Kingsport Economic Development Board has approved a cash and free rent settlement with a local entrepreneur who established a demonstration winery on the MeadowView Marriott property.

The settlement is subject to approval by the Kingsport Board of Mayor and Aldermen.

Since the fall of 2011, the city of Kingsport has been working with Michael Reedy, the owner of Reedy Creek Vineyards and Cellars, to set up the winery where visitors can sample various wines and see the wine-making process.

The operation is based in an old golf maintenance shed, where Reedy was offered a lease and KEDB agreed to do so-called “landlord’s work” on the property, said KEDB legal counsel Gorman Waddell.

“It was described as an extensive amount of work to be done, and we promised (Reedy) occupancy by Jan. 31, 2012, an extremely ambitious time frame given what we had to do: Substantial interior renovation, external renovation, relocation of the golf maintenance facility to another location, all that we promised we would do in a period of about three months, four months at the latest,” Waddell told KEDB members in a recent meeting.

The project, Waddell noted, didn’t get done until last May.

“As a result, (Reedy) lost an entire year’s ability to market his product,” Waddell said. “He had a vintage he could have marketed during that 14-month period he was not able to because his sales room was to be the renovated building. ... As a result, he said ‘I have been damaged, I have lost profits, I have interest on my money, I have equipment sitting idle, I had to ship juice to other locations, I had transportation costs,’ and so we negotiated and started in April trying to come up with a solution. ... It’s been a long, laborious negotiation.”

The settlement approved by KEDB says Reedy Creek Vineyards and Cellars would receive a $75,000 cash payment, plus two years worth of free rent valued at $27,900 per year.

In return, the business would give up damage claims and would begin paying annual rent on Aug. 1, 2015.

Waddell said the business also requested some additional property to be considered as part of lease premises — an isolated wooded area that could be used for outdoor wine tasting space.

When asked about the city’s plan to reimburse KEDB for the settlement, City Manager John Campbell indicated the money could be budgeted over several years.

Campbell, a KEDB ex-officio member, was also asked if the city was “OK” with the settlement.

“Certainly the mayor (Dennis Phillips, who was not at the KEDB meeting) has been very much involved,” Campbell said. “He feels like we need to settle it, and move on, I think we will be able to convince the board (to approve the settlement).”

For more about Reedy Creek Vineyards and Cellars go to www.reedycreekvineyards.com.